So you’re wondering how to start your own property management company?
Well, luckily, you’ve come to the right place. We’ve put together an in-depth property management resource page filled with information on the important steps to get you started on your journey to becoming a successful property manager.
Pro Tip: To get the most out of this resource page on how to start a property management company, begin by watching the video above to hear directly from a property management company owner on what they did to make their property management business thrive. Once you’ve watched the video, keep on reading the article below for the steps to take in order to become a successful property manager.
As a general property manager, you’re expected to take care of properties (commercial or residential) for individuals, real estate investor groups, and families.
Some of the upsides include the flexible schedule, low start-up costs, and an almost guaranteed passive income through your ongoing management fee.
The downsides to property management include keeping track of local state regulatory controls and legal licensing requirements on behalf of the properties you are managing. Properties are one of the biggest sources of legal complaints to regulatory agencies in various states.
But you won’t have to worry about legal complaints. You’re reading this article, so you’re already amongst the real estate professionals who do their research and avoid these legal pitfalls.
This mindset is what makes the job of being a property manager rewarding to engage in.
Being the owner of a property management company can be a great business venture for those with experience in property management or the real estate market.
As the name suggests, property managers handle almost everything related to managing a property owner’s properties, including but not limited to rent collection, leasing fees, security deposits, maintenance, control, and real estate acquisition.
What Skills Do You Need Before Starting a Property Management Company?
Since you’re going to deal with different people when managing properties – maintenance contractors, vetting companies, tenants, landlords, and the like – you should have great interpersonal and communication skills, as well as great project management skills.
It also helps if you are focused, highly motivated as well as experienced in hiring and training employees. This will help you as your management business starts to grow and you take on more properties.
If you’re looking for tips to build a solid foundation of knowledge about being a property manager before you start your professional career in property management, you’ve landed in the right place for some advice.
You don’t need to start your journey as a property manager with an expensive education or get confused by all the available property management software and tools.
Keep on reading to get the information you need that could hold the key to your future property management company’s success.
Looking for a State-Specific Guide?
Click Here for a Detailed Guide On How To Start a Property Management Company in Florida
Click Here for a Detailed Guide On How To Start a Property Management Company in California
Click Here for a Detailed Guide On How To Start a Property Management Company in Nevada
Click Here for a Detailed Guide On How To Start a Property Management Company in Texas
How to start a Property Management Company
1. Start With The Basics
Before you can start managing any properties, there are a few things you need to decide about how you’ll operate. Like with all businesses, you’ll need to meet some necessary state requirements to set up a legal entity for your property management company. Most property management companies in the North American industry are limited liability corporations, also known as an LLC. However, we recommend you consult with a real estate attorney or a real estate lawyer to find out what’s best for your situation to start a legal property management company and prepare your legal entity.
If you’d rather not consult an attorney for legal advice, setting up an LLC doesn’t need to be expensive. In fact, you can do it yourself.
You only need to look up the legal filing process for your state online and download their free Articles of Organization template. Including all fees, the total cost should range from $50-150. Don’t forget to think about your property management company name beforehand, and prepare a business bank account where you can track your business income.
Once you’ve established your property management firm as a legal entity, the next step is to set up a location, or office, where you can manage your properties. Luckily, it’s as simple as setting aside a room in your home to use as your office space for business purposes. Nonetheless, for the sake of privacy, you’d want to set up a separate post office box for your contact as a property manager.
Finally, you’ll need a professional email address, fax, and phone number before you start managing any properties so that your future property owner clients can contact you. There are a ton of online services that offer automatic call forwarding if you need a separate phone number but still want to use your own mobile phone.
As for your email account as a property manager, you can start a free email account with Zoho. If you have the budget, you can also start a Gmail account for a nominal monthly fee. Having an email account is crucial to establishing a professional point of contact with the tenants that will reside in the properties you manage.
2. Writing a Property Management Business Plan
If you want to start a property management company the right way, it’s a good idea to create a business plan with competitive pricing. A business structure plan allows you to pin down your business concept, as well as the strategies and resources you’ll use to achieve your company’s goals and effectively manage your properties. This will help set you apart.
It’s part of your responsibilities as a property manager to consider factors like relevant statistics, your ongoing management fee, figures, and other data before managing any properties. Will you manage single-family homes? Commercial real estate? Multifamily properties? There are different types of properties with specific needs to consider. Your business plan should clearly outline all the strategies that you intend to implement to operate your property management company.
Make sure your own property management business plan includes the following information:
- Projections on income generation. It’s better to be conservative with your estimates; that is, it’s better to underestimate rather than overestimate your projected income. Make sure to set realistic expectations for the number of properties you’ll be managing, as well as the management fees and leasing fees you’ll charge for each property.
- Company description and executive summary. This covers your company’s mission and vision statement. Here, you should emphasize what sets your property management business apart from most property management companies. This will help you when you’re marketing strategies to attract property owners to use you for their properties.
- Miscellaneous. Other things you should include are your product offering, pricing structure, property marketing strategies, and sales analysis/strategies, SWOT analysis, advertising strategy, expansion strategy, property management techniques, property management software solutions, rent collection strategy, the communities you want to focus on for your properties, as well as costing and financial projections.
3. Market Feasibility and Research
Don’t forget to conduct careful market analysis on the physical location of your business and the nearby properties. This way, you’ll have a clear understanding of your target demographic, responsibilities and regulations, pricing structure, the rental rates in the community, your business competition for properties, whether it’s a buyer or seller’s market, the type of property management industry you should specialize in (residential or commercial), etc.
Your responsibilities to conduct local market research don’t have to be difficult. There is a lot of information available to you online. You can start by looking at sites like Google trends to see the historical real estate demand in your city. You can also read about your local market or check out other property managers to analyze their business model and marketing plan.
4. Finding Clients
Next, you need to build your reputation and find clients for long-term success by networking with other industry professionals. The best places to network and attract potential clients are local real estate investment clubs. To contact as many potential clients, property owners, investors, and landlords as possible, join as many of these clubs as you can. Networking is crucial when it comes to expanding your client base and building your reputation as a manager.
It used to be difficult, but the digital age has made networking a breeze. Use the Internet to find clubs in your area. Start with a Google search. Look into various social media platforms, like Facebook, LinkedIn, and Meetup.com, for groups specific to your location.
Also, try to attract clients who can benefit your business and see you as an asset. For example, real estate agents can be a great source of client referrals. They’re often the first point of contact for many investors. Consider reaching out to agents in your area and offering them a referral fee. Attracting these potential clients will help set your business apart.
Besides real estate agents, hard money lenders can also be useful to your new business. Sometimes, they find themselves stuck with rental properties. You can also check out network opportunities in these non-traditional places and events.
While referrals are the best way to grow your business, you’ll also need to focus on marketing your property management business. Use a mix of online and offline avenues to do your business marketing as a manager. A great business cards are also an asset.
Here are some places to get started.
- Attend real estate business fairs, seminars, and expos to connect with real estate agents.
- Invest in online paid ads to boost exposure for your business.
- Create a high-quality property management website.
- Optimize your property management website for search engines so that it ranks higher than other property management companies.
- Advertise your property management services on rental sites and property/real estate magazines.
- Send brochures to real estate agents and property owners to secure clients.
- Sponsor TV programs related to your business.
- Leverage social media platforms like LinkedIn, Twitter, Facebook, Instagram, Google+ and Badoo to promote your property management business to real estate investors through content marketing.
- Attend landlord and residence association meetings.
- Distribute business flyers in targeted areas from time to time to attract clients.
- Place your flex banners with your company’s contacts and logos in every property you put up for lease or sale.
FREE Training: How to Launch Your Property Management Company
5. Dealing With Property Management Competition
Since the barrier to the property management and real estate industry is relatively low, expect to have a lot of competitors and make sure you’re prepared to handle it. The level of competition between management companies depends on the locality you choose to target.
For example, if you start your property management company in a small town, you’ll naturally have less opposition. Similarly, if you locate your business in large cities like Los Angeles, Las Vegas, Miami, and Houston, you’ll be up against some pretty tough businesses already established in the industry.
Regardless of where you decide to start your business, fine-tuning your marketing and sales strategies is key to your success as a property manager.
It’s never easy to start a new business. But with hard work and dedication, you can start a successful property management company in no time.
As a beginner property manager, you have to focus on providing top-notch customer service. By providing excellent property management services, you’re more likely to receive referrals from existing clients and stay ahead of the crowd.
6. Finding Qualified Tenants
Finding tenants is one thing, but finding qualified ones is another. Your first impulse as a property manager might be to look for tenants on Craigslist. However, your target market might be looking for housing in a different avenue. For example, they might be looking for homes to rent on zillow.com, trulia.com or the local daily newspaper.
Figure out the way your potential tenants and target market are searching for rental units. Focus on how you can capitalize on that method to get your prospects. Check out this article for a list of online sites you can use to find tenants as a property manager and serve a broader audience.
When performing a tenant screening, make sure you follow your state’s legal regulations. Tenant screenings ensure high-quality tenants, minimizing turnover or potential eviction fees. The eviction process can be avoided by sourcing quality tenants from your target market. Don’t forget to comply with the Fair Housing Act and all legal requirements. Otherwise, you’ll run into legal issues with your business from the get-go. Continue your research to ensure you’re legally compliant.
Once you have interested applicants, one of your responsibilities is to set up meetings to show them your properties. To avoid no-shows, confirm the meeting beforehand via phone call or email. Also, bring a hefty stack of rental application forms with you.
After narrowing down your list of applicants, make sure you do your due diligence. An important part of management is performing detailed background checks on each applicant. This includes checking their criminal history, credit score, calling references, and the like.
At move-in, be sure to include and record all the required disclosures and addendums, such as state-specific lease rules. Unfortunately, most beginner landlords and property managers underestimate the significance of having a solid lease agreement. Be polite and professional to create and maintain good relationships between the landlord (as well as the property manager) and the tenant.
The lease is the first document a judge will ask for when legal disputes between tenants and landlords or property managers arise. You can find state-specific lease agreement packages, a variety of screening services, and a free rental application for your business at EZ Landlord Forms.
7. Property Management
Good property management companies maximize clients’ profits by reducing vacancy rates and finding tenants promptly while also minimizing risks such as damages to property, handling maintenance and repairs, and litigation expenses.
One way to achieve this is for a property manager to have an effective incentive program. According to research, offering incentives to tenants can help reduce turnover and also keep residents happy. As a property manager, you can offer incentives in the form of reward points for jobs and other good deeds by tenants.
Since you’ll be dealing with repairs and maintenance requests regularly, you’ll need to have several contractors as a property manager. You’re maintenance staff may require plumbers, electricians, HVAC specialists, and pool cleaners, depending on the needs of your properties. You can find competent yet affordable contractors through the contacts you made while starting your property management company. Strive to establish close, long-term relationships with high-quality contractors for the success of your business.
Figuring out how to start a property management company and navigating the real estate industry can be challenging. But after reading and applying all these tips, you are sure to be headed in the right direction. Consistency and staying up to date with industry trends as your business grows will be equally important.
Being a manager can be an extremely rewarding job when the property owner is a knowledgeable professional like you, able to handle their responsibilities. Property management requires the ability to make critical and essential decisions on the fly, and a love of working with people and their investments.
If you need assistance marketing your property management company, don’t hesitate to contact us. We specialize in helping property management companies grow, and would love to speak with you about how we can help your management business with our expertise.
